18. Goodwill and other intangible assets

As of December 31, the acquisition cost and accumulated amortization of intangible assets consisted of the following:

Acquisition cost


in million € As of
January 1,
2009
Foreign
currency
translation
Changes in
entities
consolidated
Additions Reclassifi-
cations
Disposals As of
December 31,
2009
Goodwill 10,383 - 252 220 5 0 10,356
Patents, product and distribution rights 540 - 14 12 1 1 538
Tradenames 166 - 5 0 161
Management contracts 158 - 5 0 0 0 153
Technology 71 - 2 0 0 0 0 69
Non-compete agreements 158 - 5 3 1 0 0 157
Other 361 - 4 11 54 6 5 423
Goodwill and other intangible assets 11,837 - 287 234 72 7 6 11,857

in million € As of
January 1,
2009
Foreign
currency
translation
Changes in
entities
consolidated
Additions Reclassifi-
cations
Disposals As of
December 31,
2009
Goodwill 10,383 - 252 220 5 0 10,356
Patents, product and distribution rights 540 - 14 12 1 1 538
Tradenames 166 - 5 0 161
Management contracts 158 - 5 0 0 0 153
Technology 71 - 2 0 0 0 0 69
Non-compete agreements 158 - 5 3 1 0 0 157
Other 361 - 4 11 54 6 5 423
Goodwill and other intangible assets 11,837 - 287 234 72 7 6 11,857

Amortization


in million € As of
January 1,
2009
Foreign
currency
translation
Changes in
entities
consolidated
Additions Reclassifi-
cations
Disposals As of
December 31,
2009
Goodwill 4 0 - 4 0 0 0 0
Patents, product and distribution rights 54 - 1 41 1 93
Tradenames 0 0 0 0 0 0 0
Management contracts 0 0 0 0 0 0 0
Technology 8 0 0 4 0 0 12
Non-compete agreements 102 - 4 0 11 0 109
Other 212 - 2 31 7 234
Goodwill and other intangible assets 380 - 7 - 4 87 8 448

in million € As of
January 1,
2009
Foreign
currency
translation
Changes in
entities
consolidated
Additions Reclassifi-
cations
Disposals As of
December 31,
2009
Goodwill 4 0 - 4 0 0 0 0
Patents, product and distribution rights 54 - 1 41 1 93
Tradenames 0 0 0 0 0 0 0
Management contracts 0 0 0 0 0 0 0
Technology 8 0 0 4 0 0 12
Non-compete agreements 102 - 4 0 11 0 109
Other 212 - 2 31 7 234
Goodwill and other intangible assets 380 - 7 - 4 87 8 448

Acquisition cost


in million € As of
January 1,
2008
Foreign
currency
translation
Changes in
entities
consolidated
Additions Reclassifi-
cations
Disposals As of
December 31,
2008
Goodwill 7,098 166 3,079 50 8 18 10,383
Patents, product and distribution rights 64 - 15 403 89 1 540
Tradenames 168 7 1 - 9 1 166
Management contracts 149 9 0 0 0 0 158
Technology 68 3 0 0 0 0 71
Non-compete agreements 144 9 5 0 0 158
Other 283 0 11 29 42 4 361
Goodwill and other intangible assets 7,974 179 3,499 168 41 24 11,837

in million € As of
January 1,
2008
Foreign
currency
translation
Changes in
entities
consolidated
Additions Reclassifi-
cations
Disposals As of
December 31,
2008
Goodwill 7,098 166 3,079 50 8 18 10,383
Patents, product and distribution rights 64 - 15 403 89 1 540
Tradenames 168 7 1 - 9 1 166
Management contracts 149 9 0 0 0 0 158
Technology 68 3 0 0 0 0 71
Non-compete agreements 144 9 5 0 0 158
Other 283 0 11 29 42 4 361
Goodwill and other intangible assets 7,974 179 3,499 168 41 24 11,837

Amortization


in million € As of
January 1,
2008
Foreign
currency
translation
Changes in
entities
consolidated
Additions Reclassifi-
cations
Disposals As of
December 31,
2008
Goodwill 4 0 0 0 0 0 4
Patents, product and distribution rights 39 15 0 0 54
Tradenames 0 0 0 0 0 0 0
Management contracts 0 0 0 0 0 0 0
Technology 3 0 5 0 0 8
Non-compete agreements 88 4 0 10 0 0 102
Other 200 - 6 1 23 6 212
Goodwill and other intangible assets 334 - 2 1 53 6 380

in million € As of
January 1,
2008
Foreign
currency
translation
Changes in
entities
consolidated
Additions Reclassifi-
cations
Disposals As of
December 31,
2008
Goodwill 4 0 0 0 0 0 4
Patents, product and distribution rights 39 15 0 0 54
Tradenames 0 0 0 0 0 0 0
Management contracts 0 0 0 0 0 0 0
Technology 3 0 5 0 0 8
Non-compete agreements 88 4 0 10 0 0 102
Other 200 - 6 1 23 6 212
Goodwill and other intangible assets 334 - 2 1 53 6 380

Carrying amounts

in million € December 31,
2009
December 31,
2008
Goodwill 10,356 10,379
Patents, product and distribution rights 445 486
Tradenames 161 166
Management contracts 153 158
Technology 57 63
Non-compete agreements 48 56
Other 189 149
Goodwill and other intangible assets 11,409 11,457

in million € December 31,
2009
December 31,
2008
Goodwill 10,356 10,379
Patents, product and distribution rights 445 486
Tradenames 161 166
Management contracts 153 158
Technology 57 63
Non-compete agreements 48 56
Other 189 149
Goodwill and other intangible assets 11,409 11,457

The split of intangible assets into amortizable and non-amortizable intangible assets is shown in the following table:

Amortizable intangible assets

  December 31, 2009 December 31, 2008
in million € Acquisition
cost
Accumulated
amortization
Carrying
amount
Acquisition
cost
Accumulated
amortization
Carrying
amount
Patents, product and distribution rights 538 93 445 540 54 486
Technology 69 12 57 71 8 63
Non-compete agreements 157 109 48 158 102 56
Other 423 234 189 361 212 149
Total 1,187 448 739 1,130 376 754

  December 31, 2009 December 31, 2008
in million € Acquisition
cost
Accumulated
amortization
Carrying
amount
Acquisition
cost
Accumulated
amortization
Carrying
amount
Patents, product and distribution rights 538 93 445 540 54 486
Technology 69 12 57 71 8 63
Non-compete agreements 157 109 48 158 102 56
Other 423 234 189 361 212 149
Total 1,187 448 739 1,130 376 754

Non-amortizable intangible assets

  December 31, 2009 December 31, 2008
in million € Acquisition
cost
Accumulated
amortization
Carrying
amount
Acquisition
cost
Accumulated
amortization
Carrying
amount
Tradenames 161 0 161 166 0 166
Management contracts 153 0 153 158 0 158
Goodwill 10,356 0 10,356 10,383 4 10,379
Total 10,670 0 10,670 10,707 4 10,703

  December 31, 2009 December 31, 2008
in million € Acquisition
cost
Accumulated
amortization
Carrying
amount
Acquisition
cost
Accumulated
amortization
Carrying
amount
Tradenames 161 0 161 166 0 166
Management contracts 153 0 153 158 0 158
Goodwill 10,356 0 10,356 10,383 4 10,379
Total 10,670 0 10,670 10,707 4 10,703

Amortization on intangible assets amounted to € 87 million and € 53 million for the years 2009 and 2008, respectively. It is allocated within cost of sales, selling, general and administrative expenses and research and development expenses, depending upon the area in which the asset is used.

Estimated regular amortization expenses of intangible assets for the next five years are shown in the following table:

in million € 2010 2011 2012 2013 2014
Estimated amortization expenses 86 82 79 74 71

in million € 2010 2011 2012 2013 2014
Estimated amortization expenses 86 82 79 74 71

The carrying amount of goodwill has developed as follows:

in million € Fresenius
Medical Care
Fresenius
Kabi
Fresenius
Helios
Fresenius
Vamed
Corporate /
Other
Total
Carrying amount as of January 1, 2008 4,923 598 1,534 34 5 7,094
Additions 65 3,014 40 10 0 3,129
Disposals 0 - 9 - 9 0 0 - 18
Reclassifications 8 0 0 0 0 8
Foreign currency translation 257 - 92 0 0 1 166
Carrying amount as of December 31, 2008 5,253 3,511 1,565 44 6 10,379
Additions 125 43 61 0 0 229
Foreign currency translation - 164 - 88 0 0 0 - 252
Carrying amount as of December 31, 2009 5,214 3,466 1,626 44 6 10,356

in million € Fresenius
Medical Care
Fresenius
Kabi
Fresenius
Helios
Fresenius
Vamed
Corporate /
Other
Total
Carrying amount as of January 1, 2008 4,923 598 1,534 34 5 7,094
Additions 65 3,014 40 10 0 3,129
Disposals 0 - 9 - 9 0 0 - 18
Reclassifications 8 0 0 0 0 8
Foreign currency translation 257 - 92 0 0 1 166
Carrying amount as of December 31, 2008 5,253 3,511 1,565 44 6 10,379
Additions 125 43 61 0 0 229
Foreign currency translation - 164 - 88 0 0 0 - 252
Carrying amount as of December 31, 2009 5,214 3,466 1,626 44 6 10,356

License and Distribution Agreements

In July 2008, Fresenius Medical Care entered into two separate licence and distribution agreements, one for the US (the US Agreement) and one for certain countries in Europe and the Middle East (the International Agreement), to market and distribute Galenica Ltd.’s and Luitpold Pharmaceuticals, Inc.’s intravenous iron products, such as Venofer® and Ferinject® for dialysis treatment. In North America, the license agreement among Fresenius Medical Care’s subsidiary, FUSA Manufacturing, Inc. (FMI), Luitpold Pharmaceuticals, Inc., American Regent, Inc. and Vifor (International), Inc. provides FMI with exclusive rights to manufacture and distribute Venofer® to freestanding (non-hospital based) US dialysis facilities. In addition, it grants FMI similar rights for Injectafer® (ferric carboxymaltose), a proposed new intravenous iron medication currently under clinical study in the US. The US license agreement has a term of ten years, includes FMI extension options, and requires payment by FMI over the ten year term of approximately US$ 2 billion, which Fresenius Medical Care will expense as incurred (based upon the annual estimated units of sale of the licensed product), subject to certain early termination provisions.

In addition to these payments, Fresenius Medical Care will pay a total of approximately US$ 47 million over a four year period for the US Agreement. Thereof in 2009 and 2008 payments were made in an amount of US$ 6 million (€ 4 million) and US$ 22 million (€ 15 million), respectively. Fresenius Medical Care recorded a liability for the balance. The cost of the US Agreement and related transaction costs of US$ 6 million will be amortized over their 10-year expected useful life (based upon the annual estimated units of sale of the licensed product). Fresenius Medical Care paid US$ 15 million (€ 10 million) upon signing of the International Agreement in 2008 and could pay up to € 40 million more upon certain milestones being met. The International Agreement costs will be amortized over their expected 20-year useful life. Milestone payments will be capitalized and amortized over their useful lives at the time the milestone payments are made, of which € 15 million of milestone payments was paid in 2009.

Continue reading:
19. Other accrued expenses

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